More checks? A payroll tax cut? Trump and Congress are split on the next coronavirus stimulus plan

Christal Hayes and Michael Collins USA TODAY

Monday

May 11, 2020 at 11:10 AM

WASHINGTON – President Donald Trump and congressional leaders have pitched a number of proposals they argue are essential to a new economic stimulus plan to combat the effects of the coronavirus. The result: A grab-bag of ideas without a deal.

Trump wants a payroll tax cut that Democrats have flat-out opposed. Democrats are adamant about more funding for state and local governments. And some Republicans would rather wait and see how the nearly $3 trillion in already approved relief pans out before moving forward with more.

Pressure to reconcile the competing plans could intensify as Trump and lawmakers regroup after the country's unemployment rate reached nearly 15% last week, a grim indicator underscoring the virus' toll on American businesses and workers. Officials now predict unemployment could pass 20% in the coming months, approaching the 25% rate reached during the Great Depression.

However, discussions between the two sides are happening, White House economic adviser Larry Kudlow said on Sunday.

"We're collecting ideas for next steps," Kudlow said on ABC’s "This Week With George Stephanopoulos."

Kudlow, who described the talks as "informal," said he and another Trump economic adviser, Kevin Hassett, held a conference call on Friday with about 50 House Republicans and Democrats. Another conference call with senators is set for Monday.

Despite the talks, House Democrats may march forward on a massive package that is expected to exceed $2 trillion, with a vote possible as early as later this week. The legislation is not expected to be taken up in the Republican-controlled Senate.

Republicans, Democrats and the president have all drawn lines on provisions they say must be included in the next bill – mandates that will be major hurdles to getting more financial aid to workers, families, businesses and local governments.

What could be in the next package?

There are dozens of provisions that could make their way into the next package.

Democrats have said they want to move quickly on what they’ve called a second installment to the historic CARES Act, the $2 trillion package passed in March that sent stimulus checks to Americans, boosted unemployment benefits and created a loan program for small businesses. Republicans are touting liability protections for businesses and have also suggested a pause on additional legislation.

Here's what members of both parties have identified as key priorities in the next package:

State, local and tribal funding: Democrats have highlighted additional funds for state, local and tribal governments as their No. 1 priority in the next package. They've proposed anywhere from $500 billion to $1 trillion to help address budget shortfalls. But Trump has said he has no interest in bailing out states that he thinks have been poorly managed.
Payroll tax cut: Trump has repeatedly floated the idea of a payroll tax cut, saying "that’s going to really put people to work." The size of the cut and other details have not been released.
Cash payments: A number of Democrats are proposing additional stimulus payments to Americans, with one proposal including $2,000 monthly payments for at least six months. Trump has previously voiced support for additional payments but lately has shifted focus and emphasized the need for a payroll tax cut.Democrats have also highlighted the need to extend bolstered unemployment benefits as millions of Americans remain unemployed.
Liability protections for businesses: Republicans are demanding that any new bill include protections for business from what conservatives have called frivolous and opportunistic lawsuits as states and companies begin to reopen, a proposition that Democrats say they oppose.
Funds for hospitals, testing and hazard pay for workers: Democrats and Republicans have highlighted the needs for more testing, and liberals are pushing for billions more to rapidly expand testing as the country attempts to open back up. Bipartisan proposals have also been floated for increased funding for rural hospitals and hazard pay for front-line workers, something the president has embraced.
More funds for small businesses: Congressional lawmakers in both parties have said they are watching the Small Business Association's Paycheck Protection Program, which Congress replenished with billions in April. Lawmakers have acknowledged more funding might be needed for the program.
Infrastructure spending: Republicans and Democrats have repeatedly cited the need to repair the nation’s aging infrastructure and members of both parties have suggested a massive infrastructure could help in a recovery effort, while also creating new jobs for Americans.

Will more aid even be taken up?

While Democrats push for another round of stimulus, some Republicans are not in any rush to take up additional legislation addressing the pandemic.

Instead, many conservatives say they want to see how the funds already allocated are being used.

“Before we take up any new bill, let's have hearings. Let's have the information and data come back to us and see if there's a need. As states open up, there will be a difference of what's needed today than is needed tomorrow,” House Minority Leader Kevin McCarthy told USA TODAY.

Treasury Secretary Steven Mnuchin echoed those thoughts in an interview on Fox News on Sunday.

"We just want to make sure that before we jump back in and spend another few trillion of taxpayers’ money that we do it carefully," Mnuchin said.

Democrats are stressing that help needs to come soon and are pointing to Friday’s jobs report – which showed the U.S. lost 20.5 million jobs in April – to make their case.

“No one could look at today’s jobs report, the highest unemployment since the Great Depression, and say we should hit the pause button on further government action,as (Majority) Leader (Mitch) McConnell, Leader McCarthy and the Trump White House have said,” Senate Minority Leader Chuck Schumer, D-N.Y., said in a statement Friday. “We need a big, bold approach now to support American workers and families.”

House Speaker Nancy Pelosi, D-Calif., views the report as a call to action.

“The dire job losses show the urgent need for a bold CARES 2 package that is equal to the crisis gripping the American people," she said in a statement.

Pelosi said last week the House would move forward with its version of the bill, even though Republicans won't support it. As of last week, Pelosi said she hadn't spoken with the administration about the package.

The White House has sent mixed signals on what it wants in the next package. Eric Ueland, the White House Legislative Affairs Director, who serves as the lead White House official on Capitol Hill implementing the president’s agenda, signaled there wasn’t a huge rush to pass additional funds.

“In terms of a timeline, much of that $3 trillion has yet to actually be expended, and its impact has barely begun to be evaluated,” he said after a lunch with Senate Republicans.

White House spokesman Judd Deere stressed last week that "we are going to ensure that we take care of all Americans so that we emerge from this challenge stronger and with a growing economy, which is why the White House is focused on pro-growth, middle class tax and regulatory relief."

Mnuchin said Sunday the administration is willing to spend "whatever it takes" to boost the economy, "but whatever it takes needs to be done carefully."

Hurdles and disagreements

While the administration, congressional Republicans and Democrats have yet to start formal negotiations on a next package, three main provisions have emerged as sticking points.

The president has mandated that Congress consider a payroll tax cut, something he's been advocating for weeks.

"We're not doing anything without a payroll tax cut," Trump said at a Fox News town hall last week.

The idea, which Democrats consider a non-starter, also lacks support from Senate Republicans.

"I’m not a particular fan of that," said Senate Majority Whip John Thune, R-S.D. the chamber's No. 2 Republican.

Another hurdle: McConnell's request that further legislation must include protections for companies against lawsuits related to the coronavirus.

“If there’s any red line, it’s on litigation,” McConnell said Tuesday on these protections for businesses.

Democrats have knocked the idea, arguing Republicans are attempting to protect big businesses instead of families.

"This idea of drawing red lines — particularly when they're not really related to what the needs of people are, particularly when they side with big corporate interests as opposed to individual workers, as Leader McConnell's red line — it’s not productive and it’s not going to work," Schumer said.

Democrats have similarly highlighted funds for state, local and tribal governments as their priority, saying no bill will be taken up without additional funds for states who have seen their tax revenues devastated due to the pandemic.

"There will not be a bill without state and local" aid, Pelosi said late last month.

Many Republicans have expressed skepticism on this, with some airing concerns that states that have mismanaged finances will use the funds to fill budget holes. Instead, some have floated the option of offering more flexibility with how funds already already approved can be used by states.

"This is not the time for states and cities ...who have mismanaged their budgets over the course of many decades, for them to use this as an opportunity to see you, as a taxpayer in Arizona, as a cash cow," said Sen. Martha McSally, R-Ariz., in a townhall event Thursday.

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